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Investing

has been around since the early days of human civilization

, and its goal has remained essentially the same: maximize returns with minimum risk. However, markets have continuously evolved along with business practices, banking systems, and technology, with new products and investment vehicles emerging over time to create opportunities for an ever-expanding global investor base. The 20

th

century witnessed keen interest in the theory of investing, and it became clear there was no ''one size fits all'' strategy for making money in the financial or commodity markets. Investment styles vary according to objectives, beliefs, risk tolerance, and demographic factors, but strategies can be broadly categorized into three groups: passive, active, and hybrid. Adhering to a strictly passive or active strategy does not always deliver the best results, so combining elements of each to construct a hybrid approach can often provide the middle ground many investors seek to optimize their returns, notes financial planning expert

Mark Goldfinger

.

Active and passive investing have existed long enough to prove their merits as well as reveal their weaknesses. The first describes a strategy where portfolio owners are constantly engaged in buying and selling to take advantage of favorable market conditions. As its name indicates,

active investing

is characterized by a hands-on approach, the objective being to outperform certain benchmarks, for example the S&P500 or Dow Jones indexes. While this strategy allows for better risk management and makes it possible to seize short-term opportunities, it is also associated with higher costs due to the greater trading frequency and research expenses. With passive investing, the focus is on accumulating wealth over time. Those who favor this strategy typically buy into an index fund, betting that a multi-stock portfolio and patience will ultimately deliver the outcomes they target.

Passive investing

, which emerged as an option in 1975 with the launch of the first index fund, has become very popular in the last decade: in 2007,

about 20% of US assets

were in passive investments, but the share exceeded one-third in 2018. This strategy has the benefit of low costs, transparency, and tax efficiency, but it would not suit an investor looking for flexibility and big returns. The alternative is a hybrid approach, which can combine the best of both worlds in variations that cater to individual goals and preferences.

When properly developed and implemented, a hybrid strategy can deliver stock-like returns while minimizing the impact of market fluctuations,

MarkGoldfinger

explains. Experience has shown that traditional asset allocation is no longer the answer and a portfolio comprised of stocks alone would be prone to too much volatility. Bonds, a long-time favorite with investors, are losing their attraction as the days of low interest rates come to an end. In addition, some asset classes pose greater challenges, and successful outcomes are rarely certain. A hybrid strategy will allow portfolio owners to apply a passive approach in riskier areas and go active in market segments that have consistently proved more profitable. In this way, investors can achieve diversification and manage risk better. Although hybrid investing is not as safe as the passive variety, it carries the promise of higher returns, lower fees as opposed to a purely active strategy, and, perhaps most importantly, reduced dependency on market swings and the flexibility to adjust for risk. With a hybrid approach, investors can cherry-pick elements to create a customized strategy that considers not only their goals but also the dramatic market changes occurring post-1990.

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Mark Goldfinger

attended Bernard Baruch College in New York City, majoring in finance and marketing before proceeding on to obtain his MBA from St. John’s University. In 1990, he relocated to the west coast and began building an impressive career as a financial advisor, making it a priority to ensure peace of mind and security for his clients. His expertise covers multiple fields, including financial management, retirement planning, and special needs planning. After serving as a Business Financial Advisor at Merrill Lynch, he left to establish Stonehenge Retirement Planners LLC, a Registered Investment Advisor company whose specialties include estate and retirement planning, wealth management, asset protection, special needs planning, Medicare consultation, and hybrid investments.

Mark Goldfinger - Owner of Stonehenge Retirement Planners LLC:

http://markgoldfingernews.com

Mark Goldfinger — on the Advantages of Fixed Indexed Annuities for Retirement Planners:

https://finance.yahoo.com/news/mark-goldfinger-advantages-fixed-indexed-150000934.html

Mark Goldfinger Reviews Main Considerations in Estate Planning:

https://finance.yahoo.com/news/mark-goldfinger-reviews-main-considerations-193500359.html

Contact Information:

Mark Goldfinger

[email protected]

http://markgoldfingernews.com

SOURCE:

Mark Goldfinger

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